4 Strategies to Decrease Overtime Costs

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Is overtime management (or lack thereof) shrinking your bottom line? It’s no secret that paying time and a half can dramatically increase your labor costs. And if your workforce is already stretched thin, your supervisors and HR team probably have enough on their plates without having to worry about overtime policing every shift.

On top of that, overtime isn’t just a financial concern anymore. It’s also a legal one. With the combined standards of the Affordable Care Act (ACA), Family & Medical Leave Act (FMLA), Department of Labor (DOL), and Wage & Hour Division (WHD), overtime monitoring has become increasingly important and complex. And if you’re like most employers, then overtime management probably takes up hours of you and your managers’ time. Try out these strategies to cut that time down to just minutes!

Start with Scheduling

Before anything else, your schedule is a great indicator of where you’ll find yourself at the end of the week. Always make sure you’re not actually scheduling overtime by confirming that no employee is scheduled for more than 40 hours. Confirm you have enough people working to get the job done and that there are no gaps between shifts. Do you have a contingency plan in case an employee calls out sick? Double-check that you have other workers available to cover in case of unplanned shift changes without racking up overtime hours. (Hiring temporary staff during busy seasons can also help with this!)

Have a Workload Assessment

Sometimes, overtime issues can boil down to an “it’s not you, it’s me” situation. If you consistently see your employees working beyond their scheduled hours, it may be time to reassess their workloads. Take an honest look at how much work needs to get done. Is it doable for the number of employees you have scheduled? If your team is working on projects with strict deadlines, are they given enough notice to finish on time? And are most employees finishing their work in the allotted hours? Or is the problem specific to certain departments, individuals, or tasks?

Ultimately, it’s your job to match staffing to meet the demands of the workload. If your business has grown to require extra manpower, remember that it’s much more cost-effective to just buckle down and hire additional employees than to continue paying overtime.

Set Your Team Up for Success

Apart from adding workers, there are other (free!) tactics your management team can utilize to minimize overtime. Encouraging cross-training spreads out the workload and promotes teamwork within your organization. If only certain departments or tasks are incurring overtime, these bottlenecks are probably affecting company-wide operations. Training other (underutilized) staff to work on bottlenecked tasks can level the playing field and free up your swamped employees’ schedules.

Further, if one employee is out sick or on vacation, having multiple cross-trained employees also expands your options. Instead of having to cover the shift with your only other trained employee–who’s already at 40 hours for the week–you’ll have a larger pool to pick from. Another benefit? Allowing everyone to contribute fosters a helpful and supportive culture in your organization, which is great when busy season hits!

If assessing employee workloads and staffing reveals that overtime is actually the result of poor time management rather than hefty tasks, coaching can also be effective in decreasing overtime. Effective coaching can allow you to teach your employees how to manage and prioritize their time. Even better, you can check in with your top performing employees to learn their strategies to complete tasks with greater speed and accuracy. Again, sharing this knowledge with all of your employees streamlines your processes to minimize overtime and creates an overall better work environment.

Employee Monitoring

Though the above strategies will help to minimize the occurrence of overtime, you’ll always need to incorporate some employee monitoring. So how can you make sure this monitoring doesn’t turn into another full-time job?

Clarify Your Overtime Policy

Make sure your employee handbook sets clear expectations for employees in an Overtime Policy. Though you’ll still have to pay if an employee does incur unauthorized overtime, this will give you grounds to take action if a problem develops. Also, make sure that everyone understands that if they work overtime, they are required to record it. In light of increasingly strict labor law application, ensuring all overtime is recorded and paid not only gives you a big-picture perspective (allowing you to address deviations immediately to prevent habits from forming) but will also keep your business compliant and protected in case of a lawsuit.

Take Advantage of Tech

If all of your employee monitoring consists of peering over your employees’ shoulders and checking in with them to see if they’ve gone to lunch, then you’re definitely not being as efficient as you could be. Over the past few years, there have been a variety of technological developments to help make employee monitoring easier. For example, a workforce management platform (like SDP’s Workforce Management Suite!) can send you overtime management notifications whenever a staff member starts approaching a specified number of hours.

With this technology, you can easily decrease your overtime management to just a few minutes a week. All you have to do is set how many hours each employee is authorized to work. As soon as they start approaching their specified hours, the system will automatically notify you.

At that point, you can decide how to deal with the situation according to current production needs, cost of labor allocations, and FLSA compliance ramifications. But the key takeaway? You and your managers won’t be wasting time physically keeping tabs on every employee.

Still on the fence about timekeeping? Join us for our complimentary webinar later this month! We’ll be covering timekeeping best practices and how to know if it’s time to give your timekeeping procedures a refresh. Register today to save your seat!

What Do You Think?

What has been your experience battling overtime? Comment below to share how you have saved time and money when it comes to the dreaded time-and-a-half. Want a demo of our timekeeping system mentioned above? Simply fill out this online form to set one up today! And don’t forget to follow us on FacebookTwitter, and LinkedIn to make sure you never miss a beat!

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